Q&A Dominic Coyle
Getting to grips with PRSI on unearned income
I read with interest your information on PRSI liabilities and declaring it in self assessment where the value exceeded €3,147.
If the savings are in joint accounts, can we treat the income as half for one and half for the other allowing both to stay below the threshold?
Ms A.O’D., email
The general rule with joint accounts is that the savings are deemed to be split evenly between the signatories – whether they be two or more.
For instance, in the case of the deposit protection guarantee, which protects savings up to a maximum of €100,000 in any one institution, a joint account has protection for that amount times the number of named accountholders. Thus in your case, it would be double – i.e. €200,000.
In the same way, I understand the interest accruing on your account will be divided evenly between the two of you as joint accountholders.
Only if that brings either of you above the €3,174 threshold will the 4 per cent PRSI charge apply – but do remember that the €3,174 threshold is cumulative and also includes any other “unearned income” such as dividends from shares and/or rental income.
What form? When? How? on PRSI
I have great confusion over how this PRSI on savings works. What form to use? Do I need an accountant? Do I do it from January 2015 for 2014 or does the Revenue go back years? I am a PAYE earner, how do I calculate it?
Mr P.L., email
It’s evident you are more than slightly stressed about it and that’s not entirely surprising. The vast bulk of PAYE taxpayers have, until now, never really had to worry about filing tax returns. Unless you owned property that you were renting out, or something similar, tax returns really weren’t an issue.
The good news is that, for most people, nothing has changed.
It is very likely that you will still not need to file tax returns. Also, if you are over 66 years of age, you are not liable to PRSI.
First things first, as for the reader above, if you are under 66 and you add together ALL your unearned income – bank interest, stock dividends and rental income, if any – does it come to more than €3,174 in a year?
If not, you are not affected by the new rules on PRSI, you do not have to fill in any forms and you can rest easy. You can stop reading here.
If your annual “unearned income” is above the €3,174 threshold, then you will be affected by the new rules. So what does this mean?
First you will have to file a tax return under the self-assessment (or Pay and File) procedure. This is exactly what every self employed person does. It is intimidating only because of its unfamiliarity, and because of the number of questions on the form.